Item 5. Market for Registrant’s Common Equity
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
SENIOR SECURITIES
Information about our senior securities is shown in the following table for the years ended March 31, 2024, 2023, 2022 2021, 2020, 2019, 2018 and 2017. The report of RSM US LLP, our independent registered public accountants for the fiscal years ended March 31, 2024, 2023, 2022 2021, 2020, 2019 and 2018, on the senior securities table as of March 31, 2024, 2023, 2022 2021, 2020, 2019 and 2018 is attached as an exhibit to this Annual Report on Form 10-K.
Class and Year Total Amount Outstanding Exclusive of Treasury Securities (1) Asset Coverage per Unit (2) Involuntary Liquidating Preference per Unit (3) Average Market Value per Unit (4)
(dollars in thousands)
Corporate Credit Facility
2024 $ 265,000 $ 2,205 — N/A
2023 235,000 2,125 — N/A
2022 205,000 1,850 — N/A
2021 120,000 1,873 — N/A
2020 154,000 1,889 — N/A
2019 141,000 2,495 — N/A
2018 40,000 4,162 — N/A
2017 25,000 12,403 — N/A
SPV Credit Facility
2024 — $ — — N/A
December 2022 Notes
2024 $ — $ — — N/A
2023 — — — N/A
2022 — — — N/A
2021 — — — N/A
2020 77,136 1,889 — $ 22.01
2019 77,136 2,495 — 25.50
2018 57,500 4,162 — 25.40
2017 — — — N/A
October 2024 Notes
2024 $ — $ — — N/A
2023 — — — N/A
2022 — — — N/A
2021 125,000 1,873 — N/A
2020 75,000 1,889 — N/A
2019 — — — N/A
2018 — — — N/A
2017 — — — N/A
January 2026 Notes
2024 $ 140,000 $ 2,205 — N/A
2023 140,000 2,125 — N/A
2022 140,000 1,850 — N/A
2021 140,000 1,873 — N/A
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2020 — — — N/A
2019 — — — N/A
2018 — — — N/A
2017 — — — N/A
October 2026 Notes
2024 $ 150,000 $ 2,205 — N/A
2023 150,000 2,125 — N/A
2022 150,000 1,850 — N/A
August 2028 Notes
2024 $ 71,875 $ 2,205 — $ 25.83
(1) Total amount of each class of senior securities outstanding at the end of the period presented.
(2) Asset coverage per unit is expressed in terms of dollar amounts per $1,000 of indebtedness. On August 11, 2021, we received an exemptive order from the SEC to permit us to exclude the senior securities issued by SBIC I or any future SBIC subsidiary of CSWC from the definition of senior securities in the asset coverage requirement applicable to CSWC under the 1940 Act. The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities (including the SBA Debentures, which represents indebtedness not represented by senior securities pursuant to our exemptive order), divided by senior securities representing indebtedness. Starting from the year ended March 31, 2024, the Company updated prior year asset coverage per unit values based on this calculation by subtracting SBA Debentures from consolidated total assets.
(3) The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it. The “-” indicates information which the SEC expressly does not require to be disclosed for certain types of senior securities.
(4) Average market value per unit for our Corporate Credit Facility, SPV Credit Facility, October 2024 Notes, January 2026 Notes and October 2026 Notes is not applicable because these are not registered for public trading.
PRICE RANGE OF COMMON STOCK AND HOLDERS
Market Information
Our common stock is traded on the Nasdaq Global Select Market under the symbol “CSWC.”
The following table sets forth, for each fiscal quarter within the two most recent fiscal years and the current fiscal year to date, the range of high and low selling prices of our common stock as reported on the Nasdaq Global Select Market, as applicable, and the sales price as a percentage of the NAV per share of our common stock.
Price Range
NAV (1) High Low Premium (Discount) of High Sales Price to NAV (2) Premium (Discount) of Low Sales Price to NAV (2)
Year ending March 31, 2025
First Quarter (through May 17, 2024) * $ 27.22 $ 24.08 * *
Year ended March 31, 2024
Fourth Quarter $ 16.77 $ 26.17 $ 23.06 56.05 % 37.51 %
Third Quarter 16.77 24.29 20.72 44.84 23.55
Second Quarter 16.46 23.35 19.59 41.86 19.02
First Quarter 16.38 20.25 17.22 23.63 5.13
Year ended March 31, 2023
Fourth Quarter $ 16.37 $ 20.20 $ 16.34 23.40 % ( 0.18 ) %
Third Quarter 16.25 19.72 16.28 21.36 0.18
Second Quarter 16.53 21.23 16.70 28.43 1.03
First Quarter 16.54 24.40 17.79 47.52 7.56
(1) NAV per share, is determined as of the last day in the relevant quarter and therefore may not reflect the NAV per share on the date of the high and low sales prices. The NAVs shown are based on outstanding shares at the end of each period.
(2) Calculated as the respective high or low share price divided by NAV and subtracting 1.
* Not determinable at the time of filing.
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Our common stock is traded on The Nasdaq Global Select Market under the symbol “CSWC.” On May 17, 2024, there were approximately 319 holders of record of our common stock, which did not include shareholders for whom shares are held in "nominee" or "street name."
Shares of BDCs may trade at a market price that is less than the value of the net assets attributable to those shares. The possibility that our shares of common stock will trade at a discount from net asset value per share or at premiums that are unsustainable over the long term are separate and distinct from the risk that our net asset value per share will decrease. It is not possible to predict whether our common stock will trade at, above, or below net asset value per share.
DISTRIBUTION POLICY
We generally intend to make distributions on a quarterly basis to our shareholders of substantially all of our taxable income. In order to avoid certain excise taxes imposed on RICs, we must distribute during each calendar year an amount at least equal to the sum of (1) 98% of our ordinary income for the calendar year, (2) 98.2% of our capital gains in excess of capital losses for the calendar year ended December 31, and (3) any ordinary income and net capital gains for the preceding year that were not distributed during that year. We will not be subject to excise taxes on amounts on which we are required to pay corporate income tax (such as retained net capital gains). In order to obtain the tax benefits applicable to RICs, we will be required to distribute to our shareholders with respect to each taxable year at least 90% of our ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses. We may be subject to U.S. federal income tax and a 4% U.S. federal excise tax on any income that we do not timely distribute to our shareholders. Our U.S. federal income tax liability may be reduced to the extent that we make certain distributions during the following calendar year and satisfy other procedural requirements.
We may retain for investment realized net long-term capital gains in excess of realized net short-term capital losses. We may make deemed distributions to our shareholders of any retained net capital gains. If this happens, our shareholders will be treated as if they received an actual distribution of the capital gains we retain and then reinvested the net after-tax proceeds in our common stock. Our shareholders also may be eligible to claim a tax credit (or, in certain circumstances, a tax refund) equal to their allocable share of the tax we paid on the capital gains deemed distributed to them. Please refer to “Business —Material U.S. Federal Income Tax Considerations” included in Item 1 of Part I of this Annual Report for further information regarding the consequences of our retention of net capital gains. We may, in the future, make actual distributions to our shareholders of some or all realized net long-term capital gains in excess of realized net short-term capital losses. Our ability to make distributions in the future may be limited by our Credit Facility, the indentures governing each of our January 2026 Notes and our October 2026 Notes and the 1940 Act. For a more detailed discussion, see “Business — Election to be Regulated as a Business Development Company – Regulation as a Business Development Company,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Note 5” to our consolidated financial statements included in this Annual Report on Form 10-K.
We have adopted a DRIP which provides for reinvestment of our distributions on behalf of our common shareholders if opted into by a common shareholder. See “Business — Dividend Reinvestment Plan” included in Item I of Part I of this Annual Report on Form 10-K.
Shareholders who receive dividends in the form of stock generally are subject to the same federal, state and local tax consequences as are shareholders who elect to receive their dividends in cash. A shareholder’s basis for determining gain or loss upon the sale of stock received in a dividend from us will be equal to the total dollar amount of the dividend payable to the shareholder. Any stock received in a dividend will have a holding period for tax purposes commencing on the day following the day on which the shares are credited to the U.S. shareholder’s account.
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FEES AND EXPENSES
The following table is intended to assist you in understanding the costs and expenses you will bear directly or indirectly. We caution you that some of the percentages indicated in the table below are estimates and may vary. Except where the context suggests otherwise, whenever there is a reference to fees or expenses paid by “you,” “us” or “CSWC,” or that “we” will pay fees or expenses, you will indirectly bear such fees or expenses as investors in us.
Shareholder Transaction Expenses:
Sales load (as a percentage of offering price) — % (1)
Offering expenses (as a percentage of offering price) — % (2)
Dividend reinvestment plan expenses — % (3)
Total shareholder transaction expenses (as a percentage of offering price) — %
Annual Expenses (as a percentage of net assets attributable to common stock for the fiscal year ended March 31, 2024):
Operating expenses 3.19 % (4)
Interest payments on borrowed funds 6.93 % (5)
Income tax provision 0.12 % (6)
Acquired fund fees and expenses 0.66 % (7)
Total annual expenses 10.90 %
(1) In the event that our securities are sold to or through underwriters, a corresponding prospectus supplement will disclose the applicable sales load.
(2) In the event that we conduct an offering of our securities, a corresponding prospectus supplement will disclose the estimated offering expenses.
(3) The expenses of administering our dividend reinvestment plan (“DRIP”) are included in operating expenses. The DRIP does not allow shareholders to sell shares through the DRIP. If a shareholder wishes to sell shares they would be required to select a broker of their choice and pay any fees or other costs associated with the sale.
(4) Operating expenses in this table represent the estimated annual operating expenses of CSWC and its consolidated subsidiaries based on actual operating expenses for the year ended March 31, 2024. We do not have an investment adviser and are internally managed by our executive officers under the supervision of our Board of Directors. As a result, we do not pay investment advisory fees, but instead we pay the operating costs associated with employing investment management professionals including, without limitation, compensation expenses related to salaries, discretionary bonuses and restricted stock grants.
(5) Interest payments on borrowed funds represents our (a) estimated annual interest payments based on actual interest rate terms under our credit facilities, with available commitments of $460 million under the Company's senior secured revolving credit facility (the "Corporate Credit Facility") and initial commitments of $150 million under the Company's special purpose vehicle financing credit facility (the "SPV Credit Facility"), and our anticipated drawdowns from our credit facilities, (b) our actual interest rate terms under the SBA Debentures and our anticipated drawdowns of the SBA Debentures, and (c) the 4.50% Notes due 2026 (the "January 2026 Notes"), the 3.375% Notes due 2026 (the "October 2026 Notes") and the 7.75% Notes due 2028 (the "August 2028 Notes"). As of March 31, 2024, we had $265.0 million outstanding under our Corporate Credit Facility, $153.0 million outstanding under the SBA Debentures, $140.0 million in aggregate principal of our January 2026 Notes outstanding, $150.0 million in aggregate principal of our October 2026 Notes outstanding and $71.9 million in aggregate principal of the August 2028 Notes outstanding. As of March 31, 2024, we had no borrowings outstanding under the SPV Credit Facility. Any future issuances of debt securities will be made at the discretion of management and our board of directors after evaluating the investment opportunities and economic situation of the Company and the market as a whole.
(6) Income tax provision relates to the accrual of (a) deferred and current tax provision (benefit) for U.S. federal income taxes and (b) excise, state and other taxes. Deferred taxes are non-cash in nature and may vary significantly from period to period. We are required to include deferred taxes in calculating our annual expenses even though deferred taxes are not currently payable or receivable. Income tax provision represents the estimated annual income tax expense of CSWC and its consolidated subsidiaries based on actual income tax expense for the year ended March 31, 2024.
(7) Acquired fund fees and expenses represent the estimated indirect expense incurred due to our investment in I-45 SLF LLC, a joint venture with Main Street Capital Corporation, based upon the actual amount incurred for the fiscal year ended March 31, 2024. During the fiscal year ended March 31, 2024, the board of managers of I-45 SLF LLC approved the dissolution and liquidation of I-45 SLF LLC and the wind up of its affairs.
Example
The following example demonstrates the projected dollar amount of total cumulative expenses that would be incurred over various periods with respect to a hypothetical investment in our common stock. In calculating the following expense amounts, we have assumed we would have no additional leverage and that our annual operating expenses would remain at the levels set forth in the table above.
1 Year 3 Years 5 Years 10 Years
You would pay the following expenses on a $1,000 investment, assuming 5.0% annual return $ 109 $ 309 $ 485 $ 842
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The example and the expenses in the table above should not be considered a representation of our future expenses, and actual expenses may be greater or less than those shown. While the example assumes, as required by the SEC, a 5.0% annual return, our performance will vary and may result in a return greater or less than 5.0%. In addition, while the example assumes reinvestment of all dividends at NAV, participants in our DRIP will receive a number of shares of our common stock, determined by dividing the total dollar amount of the dividend payable to a participant by the average purchase price of all shares of common stock purchased by the administrator of the DRIP in the event that shares are purchased in the open market to satisfy the share requirements of the DRIP, which may be at, above or below NAV. See "Business - Dividend Reinvestment Plan” included in Item I of Part I of this Annual Report on Form 10-K for additional information regarding our DRIP.
RECENT SALES OF UNREGISTERED EQUITY SECURITIES
We did not sell any securities during the period covered by this Annual Report that were not registered under the Securities Act of 1933, as amended.
ISSUER PURCHASES OF EQUITY SECURITIES
On July 28, 2021, the Company’s Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $20 million of its outstanding shares of common stock in the open market at certain thresholds below its NAV per share, in accordance with guidelines specified in Rules 10b5-1(c)(1)(i)(B) and 10b-18 under the Exchange Act. On August 31, 2021, the Company entered into a share repurchase agreement, which became effective immediately, and the Company will cease purchasing its common stock under the share repurchase program upon the earlier of, among other things: (1) the date on which the aggregate purchase price for all shares equals $20 million including, without limitation, all applicable fees, costs and expenses; or (2) upon written notice by the Company to the broker that the share repurchase agreement is terminated. During the year ended March 31, 2024, the Company did not repurchase any shares under the share repurchase program.
The following table provides information regarding purchases of our common stock during the year ended March 31, 2024.
Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (2)
April 1 through April 30, 2023 — $ — — $ —
May 1 through May 31, 2023 — — — —
June 1 through June 30, 2023 (1) 46,581 19.86 — —
July 1 through July 31, 2023 — — — —
August 1 through August 31, 2023 — — — —
September 1 through September 30, 2023 — — — —
October 1 through October 31, 2023 — — — —
November 1 through November 30, 2023 (1) 6,216 22.17 — —
December 1 through December 31, 2023 — — — —
January 1 through January 31, 2024 — — — —
February 1 through February 29, 2024 — — — —
March 1 through March 31, 2024 — — — —
Total 52,797 $ 20.13 — $ —
(1) Represents shares of common stock withheld upon vesting of restricted stock to cover withholding tax obligations.
(2) On July 28, 2021, the Company’s Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $20 million of its outstanding shares of common stock in the open market at certain thresholds below its NAV per share, in accordance with guidelines specified in Rules 10b5-1(c)(1)(i)(B) and 10b-18 under the Exchange Act. On August 31, 2021, the Company entered into a share repurchase agreement, which became effective immediately, and the Company shall cease purchasing its common stock under the share repurchase program upon the earlier of, among other things: (1) the date on which the aggregate purchase price for all shares equals $20 million including, without limitation, all applicable fees, costs and expenses; or (2) upon
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written notice by the Company to the broker that the share repurchase agreement is terminated. During the year ended March 31, 2024, the Company did not repurchase any shares under the share repurchase program. As of March 31, 2024, the Company has $20 million available under the share repurchase program.
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Performance Graph
The following graph compares our cumulative total shareholder return during the last five years (based on the market price of our common stock and assuming reinvestment of all dividends, prior to any tax effect) with the Russell 2000 ETF, the S&P BDC Index and the S&P Regional Banking ETF. The graph assumes initial investment of $100 on March 31, 2019 and reinvestment of dividends. The graph measures total shareholder return, which takes into account both changes in stock price and distributions. It assumes that distributions paid are invested in like securities.
The graph and other information furnished under this Part II Item 5 of this Annual Report on Form 10-K shall not be deemed to be "soliciting material" or to be filed with the SEC or subject to Regulation 14A or 14C, or to the liabilities of Section 18 of the Exchange Act. The stock price performance included in the above graph is not necessarily indicative of future stock performance.
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Item 6. [Reserved]
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